I am thinking about purchasing PAAIX – Pimco all assets. I recently got an e-mail from Doug Fabian with an attached list of “lemon” funds. Pimco all assets was on the list. I don't know Doug Fabian from Adam and have no idea what his criteria are for selecting funds for the “lemon” list.

I like PAAIX because it has low or negative correlation with other funds I own (VBINX, FRESX, FSIIX, PBDIX). It has reasonable historical return and doesn't seem to be terribly volatile. It's a fund of funds, and I don't quite like the fact the holdings can change at any time, but it's more widely diversified than any other bond fund I'm aware of. The expense ratio (.85) is higher than I like, but not unreasonable for an actively managed bond fund. The Morningstar analyst report is generally positive.

My objective for the bond portion of my holdings is to produce a reasonable return without excessive risk. The combination of bond funds, a money market account, and a tips ladder I'm contemplating has a return of 7% and standard deviation of 3.3% based on 4 years of historical data.

I would appreciate any light anyone can shed on this issue. I am especially interested to find out anything I can about Doug Fabian and whether or not I should pay any attention to his “lemon” list.

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.

Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.